Why should the mines PS sit on FQMO board?
By Editor
Fri 08 Nov. 2013, 14:00 CAT

IT is difficult to understand why the permanent secretary in the Ministry of Mines should be sitting on the boards of First Quantum Minerals Operations, Konkola Copper Mines or indeed on the board of any mining corporation.

The Ministry of Mines is the controlling authority, the overseer, the regulator of all mining activities in this country. And the permanent secretary of the Ministry of Mines is at the helm of these mining regulating responsibilities.

How can there be no conflict of interest if in the morning, the permanent secretary in the Ministry of Mines is sitting as a director in a board meeting of a mining company planning the mining operations of that company, and in the afternoon is chairing another meeting at the ministry to regulate those same activities? This is not making sense.

We know that the Zambian government, through ZCCM-Investment Holdings, is a minority shareholder in the Zambian operations of most of these mining corporations. But this in itself does not warrant the permanent secretary in the Ministry of Mines to sit on the boards of such corporations. The most the permanent secretary can do is to sit on the board of ZCCM-Investment Holdings, since this is an investing company majority owned by the Zambian government and is not directly involved in mining operations.

Imagine what would happen if, similarly, the governor of the Bank of Zambia - a government institution tasked with the responsibility of regulating the operations of banks in the country - was allowed to sit on the board of Zanaco and Indo-Zambia Bank simply because the Zambian government hold some shares in those banks! What a type of regulation would the governor carry out in connection with these two banks?

There is clearly a breach of fiduciary duty here. The permanent secretary in the Ministry of Mines has a duty to the Zambian government to act in its best interests and he also has a duty as a director of First Quantum Minerals to act in the best interests of its shareholders. Therefore, in this case, there is a conflict of interest. Whose best interests is the permanent secretary in the Ministry of Mines serving?

We should not forget that Frederick Chiluba was successfully sued in the United Kingdom court for the breach of fiduciary duty.

What does the permanent secretary in the Ministry of Mines say when that board he sits on starts to talk about government policy? And now that First Quantum Minerals Operations has sued the government, what does he say to First Quantum when he sits on their board meetings? And what advice does the permanent secretary give to the government concerning these matters? This is like a lawyer representing the plaintiff and the defendant at the same time! Is this acceptable? Is this ethical? Is this right? And this is the government officer who the government should depend on when it comes to its differences, legal or otherwise, with First Quantum Minerals.

In reality, or in truth, the permanent secretary in the Ministry of Mines who is also a director of First Quantum Minerals, is regulating his own company. Is this right? Is this acceptable? Is this the way things should be done?

This opens up one to corruption and abuse of one's office for personal gain. We know that there are good allowances being paid to the directors of these mining corporations. But surely, should government interests be traded on the altar of sitting allowances and other perks accruing to directors of mining corporations?

There is no doubt that the permanent secretary in the Ministry of Mines is serving the interests of First Quantum Minerals Operations and other mining operations better than those of the government. There are certainly government policy decisions that the permanent secretary is more likely to push in favour of the mining corporations than the government. The mining corporations know government policy even before it is announced. But does the government really know what these corporations are plotting in their boardrooms?

It is surprising that the permanent secretary in the Ministry of Mines can sit on the board of a company that is suing government for such gigantic sums of money. And it's not difficult to guess what happens when it comes to licences! Can the permanent secretary deny a company on whose board he sits a licence? Moreover, it is the collective duty of directors to assist the company to get its licences, favourable taxes and other things from government. How possible is it with one hand, the permanent secretary gives concessions to a mining corporation on whose board he sits and with the other hand, he is demanding a fair return for the government from these same mining corporations? Things are not tying up here. There is something seriously amiss here. This whole arrangement stinks of corruption and abuse of office.

In defence of this arrangement, we are told it has been there since Frederick Chiluba's regime, this is the way things have been for a long time. So simply because a wrong thing has been there for a long time, then it should continue forever and ever - with no redemption? This is warped reasoning. We know what type of regime Chiluba led! It was a corrupt one. So the corruption of the Chiluba regime should be continued even under this government that has vowed to stamp out corruption?

No one can deny the fact that the government needs representation on the boards of the mining corporations it has stakes in. But the individuals the government appoints as directors to these companies should not come from the Ministry of Mines, a regulatory institution. There is nothing wrong with ZCCM-Investment Holdings appointing some of its directors or any other individual to represent the government interest on the boards of mining corporations it has stakes in.

There is no good reason for the permanent secretary in the Ministry of Mines to continue sitting on the boards of these mining corporations other than greed and corruption. This is undermining the interests of government and it needs to be put to an end.